• Illinois Hospital's Property Tax Exemption in Jeopardy
  • October 28, 2008 | Authors: Marc A. Hetzner; Adam C. Shields
  • Law Firm: Krieg DeVault LLP - Indianapolis Office
  • An Illinois state appeal court has recently reversed a lower court's decision that had allowed a property tax exemption for Provena Covenant Medical Center, a Catholic hospital located in Urbana, Illinois.  The decision was the latest in a back-and-forth saga regarding Provena's property tax exemption.

    Initially in 2006, the Illinois Department of Revenue ruled that Provena's charity care did not justify an exemption from property tax.  In July of 2007, an Illinois circuit court overturned the Illinois Department of Revenue's ruling and restored Provena's exemption, ruling that the hospital qualified as a charitable and religious organization.

    Provena's exemption issues have focused upon its lack of sufficient charity care and collection practices.  For the 2002 tax year at issue, more than 99.9% of Provena's patients paid for their medical services, and almost all of its $115 million in revenue came from insurance companies, private pay patients, and other contractual sources.

    Provena has publicly commented that it will appeal the decision to the Illinois Supreme Court.

    It is important to note that Illinois requirements for property tax exemption are different from property tax exemption requirements in Indiana.  Indiana's property tax exemption does not focus on a percentage or amount of charity care.  Nonetheless, the Provena case has drawn nationwide attention, as state and federal lawmakers have increasingly questioned tax exemptions for healthcare facilities.